Almost a fifth (18%) of people do not believe the state pension will exist when they retire, says Hargreaves Lansdown.
According to research by the platform provider, younger generations were more likely to believe that the state pension will not exist when they reach retirement. Only 38% of 18-34 year olds believe it will still be in existence, compared to 57% of the overall population and an overwhelming 83% of over-55s.
The widespread scepticism follows Chancellor Jeremy Hunt’s announcement in the Autumn Statement that the state pension will rise by 8.5% in April 2024 in line with the government’s triple lock guarantee.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said the “constant merry go round” of change and record-high increases in recent years has created uncertainty about the future of the state pension.
Morrissey said: “We are all living longer and this has pushed up costs. Added to this, the triple lock looks set to deliver an eye watering 8.5% increase in state pension next year, on top of the enormous 10.1% boost awarded back in April. Great news for pensioners who have been struggling with the cost-of-living crisis but also an enormous financial headache for the government.”
Morrissey said there are a few options for the government, including tinkering with the triple lock so increases are not so high.
“We saw this during the pandemic when furlough inflated wage data, prompting the government to opt for the lower inflation figure instead. We may well see this happen again. If this is the case, it gives further evidence to the case to either change or scrap the triple lock.
“The other option is to increase the state pension age. Again, we have seen this happen already and there was a recent review on accelerating the shift to 68. The government opted against this in the end but it will be revisited in future.”
The challenge for the government, Morrissey said, was that people may be forced to work longer than they are able to and some won’t live long enough to claim it.
She added: “It’s no wonder that all this change means there’s a view, particularly among younger people, that the state pension is under threat. Given its importance as the foundation upon which we build the rest of our pension planning, we need to see real long-term thinking in this area with an overarching review to ensure it remains sustainable long-term and allows people to plan their retirement with confidence.”
